A huge scheme to rebuild and expand Newcastle's Eldon Square shopping centre is set to overcome the first important planning hurdle.

The #150 million project could have an impact on shopping and traffic in neighbouring areas and Gateshead Council is among those being consulted.

Gateshead says it has no objections to the main plan but has concerns about traffic.

At a meeting today, Gateshead councillors will be asked to confirm they have no objections.

However, planning officials have some concerns about possible traffic problems and they want further work on transport implications.

Derek Quinn, group director for development and enterprise at Gateshead Council, said: "Co-ordinated policy is necessary to minimise congestion on the roads to and from the city centre which includes routes through Gateshead."

The proposed revamp of Eldon Square is one of the North East's biggest shopping projects for years. The shopping centre opened in 1976 and contains 148 shops with 961,000 sq ft of floorspace. Under the proposal, another 480,000 sq ft of retail space will be added, with 50 new shops including a department store.

Part of the complex will be demolished and rebuilt, there will be a new Greenmarket, Old Eldon Square will get a major facelift, and a new bus station will be built in Prudhoe Street to replace the underground bus concourse.

Capital Shopping Centres has submitted three planning applications to Newcastle Council and if approval is given preliminary work starts next year, construction will start in 2005 and the new-look shopping centre will be completed in phases between 2006 and 2009.

When all the new shops are open there will be 1,000 new jobs, plus 2,000 during construction.

The views of neighbouring councils are an important part of the consultation and Gateshead's response will be discussed at the next meeting of Newcastle's development control panel.

Mr Quinn says the scheme is in line with regional and national planning guidelines and while there may be some impact on the MetroCentre in Gateshead, this can probably be absorbed. In a report to councillors, he says: "The scale of the additional floorspace proposed is a reflection of the significant demand for space in the city centre from retailers, including store operators.

"It also reflects the extent of competition from other regional capitals and levels of actual and forecast growth in retail expenditure."